Acc306 wk 4 assignments

William V. Clark

ACC 306 Intermediate Accounting II

Instructor Harper

February 22, 2014

E 18-18

Requirement 1

Retirement of common shares: ($ In millions)

Common stock (5 million shares x $1 par per share) 5

Paid-in capital – excess of par ($22-5-2) 15

Retained earnings (given) 2

Cash 22

Net income closed to retained earnings

Income summary 88


Declaration of a cash dividend


Cash 33

Declaration of a stock dividend


Common stock (105-5) x4%) shares (in millions) at $1 par per share 4

Requirement 2

Brenner – Jude Corporation

Statement of Retained Earnings

For the year ended December 31, 2011

($ In Millions)

Balance at January 1, $90

Net income for the year 88

Deductions:

Retirement of common stock (2)

Cash dividends of $.33 per share (33)

4% stock dividend (20)

Balance at December 31, $123

E 18-19

April 1, 2011

Retained earnings (300,000 shares at $30 per share) 9,000,000

Common stock (300,000 shares at $1 par per share) 300,000

Paid-In capital – excess of par (remainder)

10% x 3 million shares issued and outstanding 8,700,000

Alternatively:

April 1, 2011

Retained earnings 9,000,000

Common stock dividends distributable 300,000

Paid-In capital excess of par 8,000,000

June 1, 2011

Common stock dividends distributable 300,000

Common stock 300,000

E 18-24

Determining the return on shareholders’ equity for 2011 is computed by dividing net income by average shareholders’ equity.

($200-$120) ÷ ($600 + $520) ÷ 2) = 14.29%

This is an increase in retained earnings that equals net income, being that no dividends were paid.

The ratio is a measurement of profitability that investors, potential investors, and common shareholders’ use to measure the company’s ability to generate net income from the resources that the owners provide.

However, due to shareholders’ equity being a measure of the book value of equity, investors relate earnings to the market value of equity by calculating the earnings price ratio.

P 18-5

Requirement 1

2011

November 1- Declaration date


Cash dividends payable

(105 million shares at $.80 per share) 84,000,000

November 15 - Date of record (no entry)

December 1 - Payment date

Cash dividends payable 84,000,000

Cash 84,000,000

2012

March 1 – Declaration date

Investment in Warner Corporation bonds 300,000

Gain on appreciation of investment

(1.6 million – 1.3 million) 300,000


Property dividends payable 1,600,000

March 13 – Date of record (no entry)

April 5 - Payment date

Property dividends payable 1,600,000

Investments in Warner Corporation Bonds 1,600,000

July 12

Retained earnings (5,250,000 x $21 per share) 110,250,000

Common stock (5,250,000 – 250,000) x $1 par 5,000,000

Paid-In capital – excess for par

(5,250,000 – 250,000) x $20 per share 100,000,000

Cash (250,000 share at $21 market price per)

(105,000,000 shares x 5%) = 5,250,000

November 1 – Declaration date


Cash dividends payable (110,000,000 x $.80) 88,000,000

(105,000,000 + 5,000,000) = 110,000,000)

November 15 – Date of record (no entry)

December 1 – Payment date


Cash 88,000,000

2013

January 15

Paid-In capital – excess par 55,000,000

Common stock (55,000,000 share at $1 par) 55,000,000

Alternatively:

110,000,000 million shares x 50% = 55,000,000 shares

November 1 – Declaration date


Cash dividends payable (165,000,000 x $.65) 107,250,000

(105,000,000 + 55,000,000 + 5,000,000)= 165,000,000 shares.)

December 1 – Payment date


Cash 107,250,000

Requirement 2

Branch-Rickie Corporation

Statement of Shareholders’ Equity

For the years ended December 31, 2011, 2012, and 2013 ($ in thousands)

Total

Common Additional Retained Shareholders’

Stock Paid-in Capital Earnings Equity

Jan. 1, 2011 105,000 630,000 970,000 1,705,000

Net income 330,000 330,000

Cash dividends (84,000) (84,000)

Dec. 31, 2011 105,000 630,000 1,216,000 1,951,000

Property

Dividends (1,600) (1,600)

Common stock

Dividends 5,000 100,000 (110,250) (5,250)

Net income 395,000 395,000

Cash dividends (88,000) (88,000)

Dec. 31, 2012 110,000 730,000 1,411,150 2,251,150

Total

Common Additional Retained Shareholders’

Stock Paid-in Capital Earnings Equity

3 for 2 split

Effected in the

Form of a stock

Dividend 55,000 (55,000)

Net income (107,250) (107,250)

Dec. 31, 2013 165,000 675,000 1,758,900 2,598,900

E 19-2

Requirement 1

$2.50 Fair value per share

X 12 million Shares awarded

$30 million Fair value awarded

Requirement 2

Jan. 1, 2011 No entry

Requirement 3

Dec. 31, 2011 ($In millions)

Compensation expense ($30 million ÷ 3 years) 10

Paid-in capital – restricted stock 10

Requirement 4

Dec. 31, 2012



Requirement 5

Dec. 31, 2013



Requirement 6

Dec. 31, 2013


Common stock (12 million shares x $1 par) 12

Paid-in capital – excess of par (remainder) 18

E 19-4

Requirement 1

$22.50 fair value per share

X 4 million shares granted

$90 million fair value award

Requirement 2

(No entry)

Requirement 3

($ In millions)



Requirement 4

$22.50 fair value share

x 4 million shares granted

x 90% 100% - 10% forfeiture rate

81 million fair value award

E 19-5

Requirement 1

$3 fair value per option

X 4 million shares granted

$12 million total compensation

Requirement 2

(No entry)

Requirement 3

(In millions)


Paid-in capital – stock options 6

Requirement 4


Paid-in capital – stock options 6

E 19-9

Cash ($12 x 50,000 x 85%) 510,000

Compensation expense ($12 x 50,000 x 15%) 90,000

Common stock ($1 x 50,000) 50,000

Paid-in capital – in excess of par ($11 x 50,000) 550,000

References:

Intermediate Accounting II Spiceland, Sepe, and Nelson

Documents

Acc306 wk 4 assignments